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For IT, Obama 2.0 means business as usual

Thursday, 8 November 2012 - 10:00am IST | Place: MumbaiBangalore | Agency: dna
Sees rhetoric against outsourcing easing post polls, but rising US visa fees and application rejections, costlier onshore hiring are concerns.

Indian IT industry’s leading lights remain optimistic in spite of several concerns following Barack Obama’s re-election.

Tech Mahindra’s CEO Vineet Nayyar, for one, said Obama’s re-election will sharpen focus in the US on reducing deficit, fostering growth and creating jobs, which will require the help of Indian IT firms.

Agreed Krishnakumar Natarajan, CEO and MD of Mindtree: “US unemployment levels are high only in certain sectors. A rapid recovery will benefit the entire global economy, including the Indian IT sector.”

It is a view echoed by TCS and HCL Technologies as most IT firms have already completed their on-site hiring for the year, and expect business continuity going forward.

It would be business as usual, most industry captains said. But it was by no means a consensus. Some said future of outsourcing, possible higher visa costs and rise in on-site hiring may be their new concerns.

Not welcome news, given the backdrop of fewer US deals (which usually generate up to 80% of their revenues).

Phaneesh Murthy, CEO of iGate, said, “This (Obama’s re-election) is not the best news for the IT outsourcing industry.”

Others wondered if the campaign-time rhetoric against outsourcing was just a political gimmick or if it would continue into 2013. “That will determine the full implications,”said Murthy. According to Kris Gopalakrishnan of Infosys, latest quarterly margins fell due to the 3-4% drop in utilisation.
US visas for Indian professionals is another concern. TCS, for instance, sought 5,900 H-1B visas this year so far, 1,400 more compared to last year, to combat the 50% L1 visa rejection rates.

Kris Lakshmikanth, MD of HeadHunters India, said, “If IT firms pay fee for five visas, only one or two applications may be successful. Given the recent trend of rising fees, costs of IT firms will likely be higher, pushing Indian IT firms toward on-site hiring (that is, hiring costlier US-based talents). But that would savage the margins.”

Pradeep Udhas, partner at KPMG, concedes this point, but thinks on-site hiring is not such a bad thing, after all. “It will help Indian IT companies become truly multinational and aid in their non-linear growth.” He, however, fears Indian firms that rely on US government projects may be impacted.

Although outsourcing is expected to continue to be a necessity for the Obama administration, “US companies could well shift outsourcing jobs from India to lower-cost countries”, said Lalit S Kanodia, chairman of Datamatics Global Services

 




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